Gizmondo’s Spectacular Crack-up

THE BUMP IN THE ROAD that ended Bo Stefan Eriksson's fantastic ride is practically invisible. From 10 feet away, all you can see is the ragged edge of a tar-seamed crack in an otherwise smooth sheet of pavement. Only the location is impressive – a sweet stretch of straightaway on California's Pacific Coast Highway near El Pescador state beach, just past the eucalyptus-shaded mansions of the Malibu hills. On that patch of broken asphalt, there's barely enough lip to stub a toe. Of course, when you hit it at close to 200 miles per hour, as police say Eriksson did in the predawn light last February 21, while behind the wheel of a 660-horsepower Ferrari Enzo, consequences magnify.

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The Enzo has less than 6 inches of ground clearance, and at that speed, it took only a slight scrape under the front bumper to launch the vehicle. The airborne Ferrari landed in a skid that in a blink became a sidelong drift. Tires shredding, the car bounced over the shoulder onto a grassy slope wet with dew. All Eriksson could do was hold on as the slithering, swiveling Enzo again achieved liftoff, then slammed broadside into a wooden power pole.

The crash became an instant media sensation. In Los Angeles, the destruction of the rare million-dollar Ferrari – and the strange story that rose from the wreckage – dominated local radio talk shows and TV newscasts for days. For most, it was just another diversion, the newest twist on the high-speed-chase formula the city loves. But the public attention would spell disaster for a handful of people connected to Eriksson, many of them fellow participants in one of the biggest debacles in the history of the videogame industry: the epic meltdown of Gizmondo Europe, Eriksson's former company.

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In the early 2000s, Gizmondo rose to prominence as the maker of a handheld gaming device designed to compete with Nintendo's DS and Sony's PlayStation Portable. The company touted its gadget as the next big thing in pocket electronics and, at one point, talked of moving half a million units in just a few months. But critics panned the device, and it failed to entice many customers. A month before Eriksson went off the road, Gizmondo declared bankruptcy, having hemorrhaged nearly $400 million in less than four years.

It might have ended there, another high-flying company with big ambitions and a lousy product. But the crash put a spotlight on Eriksson and raised a series of questions: Who is he? What kind of person drives nearly 200 mph on a coastal highway? The answers led to even more puzzles. In just a few years, it seems, Eriksson went from languishing in a European jail cell to making millions as a tech executive to, even more improbably, becoming deputy commissioner of antiterrorism for an obscure Southern California transit police force. Before ­Eriksson lost control of his Ferrari in Malibu, no one in the US really cared about his strange story. But after the supercar came apart, Eriksson would find every inch of his life under scrutiny by the LA County Sheriff's Department, federal law-enforcement officers, and the media. That's when Eriksson and a tangle of cohorts would find out just how large a little bump could loom.

WHEN LOS ANGELES COUNTY sheriff's deputy David Huelsen arrived at the scene of the accident, he thought Eriksson must be the luckiest person alive. That the man was standing by the side of the road after a crash of such intensity was an astonishing testament to Ferrari craftsmanship. The cherry red Enzo had sheared in half on impact with the pole, its back end blasting apart like a roadside bomb. "Multiple pieces of what appeared to be a vehicle," as Huelsen put it, were spread across the length of four football fields. The chaparral and creosote along the shoulder of the road were riddled with fragments of smoking auto parts, and the shattered power pole dangled from sagging wires like the stiffened corpse of a hanged man. The Enzo's carbon-fiber passenger compartment, though, was perfectly intact, a protective womb of inflated airbags from which the 44-year-old Eriksson had emerged with nothing but a split lip.

A thick-chested man with a mane of dark blond hair and a heavy chain around his neck, Eriksson had both the build and the blunted features of a heavyweight boxer. Speaking in a Scandinavian accent, Eriksson explained that he was just a passenger in the Ferrari. The driver, a man he knew only as Dietrich, had jumped out after the crash and fled into the hills, Eriksson said. The sheriff's deputy was further confounded by another man standing on the roadside, a fellow who introduced himself in an Irish accent as Trevor Karney. He had been a passenger in a Mercedes-Benz that was following the Ferrari at the time of the crash, Karney explained. When the Mercedes stopped, he jumped out to check on the two men in the Ferrari, Karney said, only to be abandoned when the Mercedes driver panicked and sped off without him. It was Karney who had reported the accident, borrowing the cell phone of a Good Samaritan who'd stopped at the scene.

Huelsen was trying to get the story straight when Eriksson reached into his wallet and pulled out a card with an official state seal that said he was a member of an antiterrorism task force. Then an SUV and another car pulled alongside Huelsen's police cruiser. Two men climbed out, quickly flashed what appeared to be badges, and identified themselves as homeland security officials. The men said they needed to speak to Eriksson immediately. The thoroughly boggled Huelsen radioed his sergeant at the Lost Hills station and asked what the hell he should do. Keep Eriksson at the scene, said the sergeant, who then dispatched helicopter and mountain rescue units to look for this Dietrich character. The helicopter crew soon reported that it saw no sign of anyone fleeing into the hills. With two men but no drivers, the whole thing was sounding fishy. Huelsen had earlier noticed Eriksson's bloodshot eyes and the smell of alcohol on his breath. Suspecting that Eriksson may have actually been driving the Ferrari, the deputy administered a Breathalyzer test around 7:30 am, about an hour and a half after the crash. The test showed Eriksson had a blood alcohol content of 0.09 percent. In California, any vehicle operator with a blood alcohol content of 0.08 or more is considered under the influence.

Despite this, both men were permitted to leave. It was a decision the sheriff's deputies would surely regret later that morning, when they received a call from that Good Samaritan who had stopped and let Karney use his cell phone. The man (whose identity police are withholding) explained that he had discovered what turned out to be the fully loaded magazine for a .40 Glock automatic pistol stuffed beneath his front seat; Karney, the man figured, must have dumped it there while borrowing the phone.

IN THE DAYS FOLLOWING the crash, gearheads were aghast. The wreck had "destroyed one of the finest cars on earth, maybe the finest," Chris Banning, vice president of the national board of the Ferrari Owners Club, told the Los Angeles Times. "It's like taking a van Gogh painting and burning it." Ferrari manufactured a mere 400 of the gull-winged vehicles, incorporating its Formula One racing technology into a V-12 engine capable of going from 0 to 62 mph in 3.7 seconds and reaching a top speed of 217 mph. Originally priced at around $650,000 and sold only to previous Ferrari owners, the car's resale value had risen to roughly $1.2 million. "I would rank it as probably the most incredible exotic-car crash in history," says Gregg Carlson, who runs WreckedExotics.com, a Web site devoted to accidents involving expensive automobiles, which had begun posting daily updates about the crash.

Within a few weeks, a local entrepreneur was marketing a T-shirt with an image of the demolished ­Ferrari on the front and "… DIETRICH?" on the back. Car enthusiasts scoured the crash site for souvenirs; one even sold scraps on eBay. Meanwhile, the authorities knew that the story was going to get even bigger the case was spinning off in directions so varied and bizarre, it was all they could do to follow the latest developments.

The first twist: Officials at Scotland's Capital Bank, who had read about the crash in the papers, phoned the LA Sheriff's ­Department to say that the Enzo didn't belong to Eriksson – it belonged to them. They had leased the car to Eriksson in 2005, when he was an executive at Gizmondo Europe making about $2.2 million a year. But Eriksson had stopped making payments on the red Enzo within a few months and, by the time of the accident, was in default. The bank hadn't yet reported the car stolen, but only because it believed the auto was still in the UK. Soon a second British bank – Lombard – was calling the department. Did they know if Eriksson had brought a black Enzo to California along with the red one? In fact, the black Enzo was parked in the garage of Eriksson's $3.6 million Bel-Air home, right next to a Mercedes-Benz SLR McLaren, which a third bank owned and had recently reported stolen. Eriksson had somehow managed to import $3.8 million in cars he didn't own into post-9/11 America.

Detectives received their next surprise when they attempted to interview Karney in Marina del Rey, only to find that the address he had given was outdated. While searching for the missing man, sheriff's investigators learned that the Irishman had previously worked for West Coast Customs, the shop famous for tricking out cars on the MTV show Pimp My Ride. Finally able to reach Karney's lawyer, detectives were informed that Karney, 26, had returned to his native country.

Perhaps the biggest mystery, however, was how Eriksson had become part of an "antiterrorism" unit. The detectives learned that Eriksson's appointment to this position had been arranged under the auspices of an obscure bus company called the San Gabriel Valley Transit Authority, based in Monrovia, a tidy little city northeast of LA. The outfit, they found out, was run by a 39-year-old man named Yosuf Maiwandi.

Maiwandi explained that the SGVTA started when he obtained a small bus in trade for several motorcycles. With that bus and four others purchased later he had created a service to transport disabled people throughout the San Gabriel Valley. Maiwandi said he had been told that bus companies in California are entitled under state law to form their own police departments. He had done so, he claimed, because it would allow him to perform background checks on volunteers more quickly. Such private police forces are typically created to patrol college campuses – the SGVTA appeared to have taken advantage of the same regulations that permit Stanford and USC to outfit uniformed officers with badges and guns.

Maiwandi said that he had met Eriksson when, one day, a Rolls-Royce pulled up in front of the dilapidated SGVTA garage. Out stepped Eriksson, who introduced himself and explained that he had learned of the bus company through their mutual lawyer. Eriksson then made a fascinating proposition: He offered to install – for free – surveillance cameras and facial-recognition scanners on SGVTA buses, asking Maiwandi to name him deputy commis­sioner of the bus company's police department in return. Maiwandi agreed.

It's not clear what, if anything, Eriksson actually did for the bus company. But the SGVTA police force he had joined claimed to be a squad of officers who were battling terrorists "on the front lines," operating undercover, and "playing a vital role in the defense of Southern California's homeland security," according to the SGVTA Web site. Sheriff's investigators had no idea what Eriksson and Maiwandi were up to but now suspected that the supposed homeland security officers who showed up at the Malibu crash site had in fact displayed SGVTA IDs. The authorities soon also linked the transit police department to another former Gizmondo executive, named Carl Freer. Detectives suspected Freer – who, like Eriksson, is a Swedish citizen and was a member of the SGVTA's antiterror­ism squad – of having used an SGVTA police force badge in an attempt to skip the background check for a gun purchase. A subsequent search of Freer's 100-foot, $10 million-plus yacht and multimillion-dollar Bel-Air home turned up 12 rifles and four handguns.

A few days after the crash, Eriksson, who had been cooperating with investigators, suddenly stopped talking. He had learned, it seemed, that the story of his smashup was being reported in Sweden, where police would remember him well. Once the cops and the media in the US spoke with them, Eriksson had to know, his past, including the Swedish gang and the too-good-to-be-true years at Gizmondo, would come back to haunt him.

SITTING AT A CAFÉ TABLE perched on the concrete banks of Sweden's Fyris River, in the city of Uppsala, Lars Nylén is reminiscing about the years he spent pursuing Stefan Eriksson. "He might have been the smartest criminal I've ever encountered," says Nylén, a former police commissioner who now runs the country's national prison system. "But as smart as he was, being noticed seemed to mean more to him than staying out of jail."

Eriksson started his criminal career as a roly-poly teenager known as Tjock-Steffe (Fat Steve). He was suspected of small but clever crimes and received his first prison term at age 19 for robbing a bank van. Released after serving a short sentence, Tjock-Steffe rapidly transformed himself into a heavily muscled young man through anabolic steroids and karate lessons.

Around this time, Eriksson hooked up with a pair of equally ambitious young criminals. Johan Enander had outsize muscles, flat eyes, and a quick-set scowl emphasized by his shaved head (police called him "the torpedo"). He had a reputation in Uppsala as the kind of man who would crack your skull if you got in his way. Peter Uf, on the other hand, was more cerebral. He presented himself as an art dealer.

The Nordic Criminal Journal described Eriksson as "the undisputed leader," who "controlled everyone in the gang with an iron fist." Eriksson drove a Corvette and wore expensive jewelry, financing himself by selling steroids and cocaine. In 1988, he was convicted of drug trafficking and served just over a year in prison – some of it in Hall, one of Sweden's toughest big houses. But this was a mere coming-of-age event, according to Nylén. After getting out, Eriksson and his associates launched a criminal enterprise with an appetite for kidnapping, counterfeiting, and fraud.

Their bread and butter, however, was debt collection. For this, the gang relied on hardball tactics that were shocking to the staid Swedish populace. In one instance, according to prosecutors, Eriksson and Enander terrorized a man named Hamber Hersan. It seems Hersan's friend owed the gang 100,000 kronor ($13,000), and one day the two men pushed their way into the friend's apartment only to find Hersan there alone. When Hersan insisted he had no idea where his friend was, authorities say, Eriksson punched him four times in the face, knocking out several teeth, then retrieved a chef's knife from the kitchen and threatened to cut off his fingers. Hersan told authorities that when he still didn't give them any information, Eriksson jammed the barrel of a pistol down his throat. Eventually Hersan was dumped at a hospital, so frightened he claimed that he had been injured in a car crash. Later, when forced to testify against Eriksson, Hersan suddenly seemed confused about exactly what Eriksson had done to him.

The gang eventually became known throughout Sweden as the Uppsala Mafia. Eriksson was regarded as a glamorous figure in Uppsala's nightclubs, where he impressed women as a sort of outlaw business executive, as comfortable in a pin-striped suit as in a black leather jacket. He often held his meetings in an exclusive Stockholm hotel, and he and his men moved about town, toying with the team of detectives that followed them. "We saw that they were picking up people and driving them around the city," Nylén recalls. "We knew these people were being threatened, but we could never get them to testify. They were too terrified."

Eriksson's run finally ended in 1993, when he was tried and convicted on charges relating to two of the Uppsala Mafia's most ambitious schemes an attempt to defraud a Swedish bank's money transfer service and a plan to distribute millions in counterfeit Swedish kronor. In a sting, Uppsala Mafia affiliates were caught trying to withdraw as much as 25 million kronor (about $3.5 million) from various accounts that didn't belong to them. When Eriksson was arrested, he was carrying 500,000 kronor ($65,000) in his pockets. He was convicted of gross fraud, counterfeiting-related charges, assault, and other crimes. For all this, he received a sentence of nearly 10 years. He was released after a little more than six.

ERIKSSON EMERGED FROM prison in 2000, and within a few years he would become a highly paid European tech executive. The man who would make this magic transformation happen was fellow Swede Carl Freer.

According to Freer, he and Eriksson originally met in Stockholm in the late '80s, when Freer was managing nightclubs there. The two had reconnected by 2001 (according to European media, the pair was involved in a shady car transaction), but Freer's main operation at that time didn't involve Eriksson at least not yet. Freer had started a small company called Eagle Eye Scandinavian, which distributed GPS devices. Freer then somehow convinced the owners of a Florida business named Floor Décor a floor-covering outfit with two stores to radically change direction by acquiring Eagle Eye. Analysts now believe that Freer was mostly interested in the Florida operation's over-the-counter stock listing, which would allow him to raise capital by selling shares. Once the deal was completed, another unlikely character, Michael Carrender, came on as the company's chief financial officer.

Carrender had an unusual background. As a student in the '70s, he had joined a fundamentalist religious sect that would become known as the End Timers. Led by Charles Meade, in 1984, the group relocated from various states in the Midwest, concentrating themselves in Lake City, Florida. Carrender, still a member, describes the group as "quite conservative," with "a very strict interpretation of scripture." Members reject newspapers as instruments of the devil, and refuse to own pets, because animals can harbor demons. The group, now known as Meade Ministries, dominates Lake City, controlling numerous businesses and owning more than half of the houses in one subdivision. Meade (who compares himself to Moses) has taught his followers that their "end-time army" should wrest all the wealth it can from "the unbeliever."

Once on board with Freer, Carrender quickly helped transform Floor Décor into an electronics company, giving it the name Tiger Telematics. In August 2002, Carrender was named CEO. Within a few months, the company decided it would develop its own GPS technology to launch a "child-tracking" system. This kind of business was attractive to investors, one industry analyst who followed the company closely observes, "because it had such a good sales pitch: 'Wouldn't you pay $200 for something that will tell you where your child is 24 hours a day?'" But getting teenagers to carry such a device can be difficult. So in 2003, Tiger Telematics announced that the solution was to install its still hypothetical child-tracking system in a handheld videogame console, something it first called Gametrac but eventually renamed Gizmondo.

TO MAKE AND MARKET THE DEVICE, Tiger Telematics formed a UK subsidiary called Gizmondo Europe, which Freer would run. Freer immediately established himself as a rising star in London's business community. A big, broad-faced blond, he possessed a remarkable ability to recruit investors. "Mr. Freer has one of the most magnetic personalities I've ever encountered," says Rich Clayton, Gizmondo Europe's former creative director. "When he told people about Gizmondo, they would literally beg him to let them invest in the company."

For his efforts as managing director, Freer was awarded a compensation package that totaled nearly $2.2 million in 2004, his first full year on the job. He and his wife (who was paid $174,000 by Gizmondo for "consultancy services") moved with their children onto a huge estate in Hampshire and filled the garage with expensive autos. On weekends, Freer could combine the two passions he shared with Eriksson – expensive jewelry and flashy vehicles – by roaring around on a Harley-Davidson with a diamond-etched crankcase.

Eriksson was invited to board the money train soon after Freer took the reins at Gizmondo. Freer justified Eriksson's appointment as a Gizmondo director by saying his friend was making "strategic introductions" to people in the auto-racing business who would invest in the company or sign sponsorship agreements. One such deal was actually signed – with Jordan Grand Prix – but it ended badly; Jordan filed a lawsuit after Gizmondo failed to pay what it owed for sponsoring Jordan's racing team. Nevertheless, in 2004 Eriksson was rewarded with an annual compensation package that included $867,465 in salary, $1,365,456 in bonuses, and 884,024 shares of stock, along with an "automobile allowance" of $104,095. He settled into a house within a gated community in one of London's most exclusive suburbs, St. George's Hill, where he is still remembered for his raucous parties.

It wasn't long before Eriksson imported his wingmen from the Uppsala Mafia. Johan Enander, who had served more than two years for crimes including grand theft and extortion, handled security for Gizmondo functions. Peter Uf, who had spent more than five years in prison for fraud, was named a Gizmondo director. The company opened a glass-fronted corporate headquarters next to Farnborough Airport, and expensive Ferraris and McLarens dotted the parking lot. To add to the glitter, in 2004 Gizmondo purchased a 75 percent interest in a London modeling agency called Isis, ensuring that there would be plenty of beautiful young women at its parties and events. And in early 2005, the company secured a presence in central London, signing a $334,000 lease for a shop on posh Regent Street, intending "to ape the Apple showroom up the road," as The Mail on Sunday put it.

As for the device itself, the Gizmondo was crammed with attention-grabbing features. In addition to the GPS system, the handheld console was given MP3 and video players, gyroscopes for motion sensing, multimedia messaging, and Bluetooth wireless networking for multiplayer games. Players who agreed to watch ads beamed to them over cell phone networks would get a discount on the initial purchase price (oddly, the device couldn't make phone calls). The kitchen-sink approach worked: Aided by the powerful PR firm Ogilvy Public Relations Worldwide, Gizmondo grabbed headlines and filled news columns even before it had a product to sell. (Eventually, Gizmondo's PR blitz would become so hyperbolic and relentless that the blog Engadget warned, "There's a fine line between 'buzz' and 'white noise,' but you guys have definitely crossed it.") Investors poured money into the company, and Tiger Telematics' stock shot from 53 cents a share in late 2003 to $32.50 a share in early 2005. The company spent this cash furiously, running up charges of nearly $150,000 for luxury suites at the Dorchester hotel alone, despite earning a paltry $316,000 for all of 2004 (all from acquired companies like Isis).

The only disquieting notes to emerge publicly back then involved revelations about Freer's exaggerated biography. The company's first 10-K SEC filing described Freer as a "co-founder of software company VXtreme," but Freer had never been involved with VXtreme (which Microsoft purchased in 1997). "A minor typo," Carrender explained when a reporter at the San Jose Mercury News pointed out the discrepancy: Freer had actually founded Weextreme, which Carrender described as an "offshore-based Internet consulting company that ceased to operate in the late 1990s." (Wired has been unable to verify that such a company existed.) Official papers also said that Freer once served as a trustee of London's prestigious King's Medical Research Trust. He never has.

What went unreported in the media, however, was that in 2004, Freer and Eriksson had also been engaging in a series of what accountants call related-party transactions. The Tiger Telematics board of directors later discovered that the two Swedes were enriching themselves by making deals between Gizmondo and other companies the duo had business ties to. The most significant of these involved the development of games for the device. Gizmondo paid more than $3.5 million to a software company called Northern Lights; Freer and Eriksson admitted to owning almost 50 percent of its stock. And while it wasn't officially reported as a related-party transaction, Freer and Eriksson also approved payment of nearly $4 million in 2005 to a British company called Game Factory Publishing to develop games, which were never delivered. That company, it turned out, was directed by a close friend of Freer's.

The Gizmondo console was finally unveiled in spring 2005. Things began well: The company's March 2005 launch party at the Park Lane Hotel in London was a media sensation. Guests sipped free Cristal champagne as hosts Dannii Minogue and Tom Green introduced performers like Sting and rap stars Pharrell Williams and Busta Rhymes (both of whom were flown in from the US for the occasion). Following the event, Freer was hailed as the new player in London's frenzied financial scene. People who actually knew something about videogames, however, greeted the device with derision. To justify a price of about $400 – more than twice that of Nintendo's recently released DS portable game device – the company billed the Gizmondo as having "cutting edge gaming, multimedia messaging, and an MP3 music player." But critics looked at the oddly shaped console with its black rubber jacket and saw an electronic turd. "Too little, too late. It's lacking games support, it's uncool," is how CNET's UK Web site described it. "The product lacks focus, suffers from numerous flaws, and carries an insultingly high price tag," CNN/Money's Chris Morris later wrote. Gizmondo's slate of games, like Furious Phil, Johnny Whatever, and Momma, Can I Mow the Lawn? were widely ridiculed.

Freer was unbowed. "If you look at the size of the market," he told the British press, "there's room for several contenders." But Gizmondo would find it difficult to compete with the likes of Nintendo and Sony – which had just released the PlayStation Portable – when at launch its console was available only on the company Web site and at a handful of stores.

Tiger's SEC filings show that the company lost more than $300 million between January 2004 and July 2005. Creditors began circling. Ogilvy sued for more than $4 million it claimed it was owed for marketing and advertising. MTV Networks Europe demanded $1.5 million after Gizmondo reneged on an agreement to sponsor several of the network's shows, one of them its annual music awards. (The Jordan Grand Prix lawsuit had been for $3 million). As Tiger and Gizmondo prepared for their much-anticipated US launch in October 2005, the companies were being kept afloat by $21.2 million in loans from a pair of wealthy British shareholders and had taken to paying suppliers with shares of stock instead of cash. Still, Carrender told a reporter, "we think it's going to do pretty well in America."

On the Friday before the US launch, Carrender received news that left him "thunderstruck": Freer and Eriksson were submitting their resignations as Gizmondo directors. "They mentioned an article that was coming out," Carrender recalls. "I didn't know what they were talking about." What the Swedes were talking about was a story set to appear in the Swedish tabloid Aftonbladet, whose reporters had been advised that the Stefan Eriksson making millions as a director of Gizmondo Europe was the same Stefan Eriksson they knew as a Scandinavian crime lord.

Over the next few months, Gizmondo's collapse was swift. The European launch had fizzled. The US launch was bombing. Questions about Eriksson and Freer persisted. By November, the share price for Tiger Telematics had dropped to $7, on its way to eventual worthlessness. Its investment stream no longer even a trickle, Gizmondo Europe declared bankruptcy in January 2006. The company halted production of the Gizmondo gaming device shortly thereafter.

FOLLOWING SUCH A PUBLIC DEBACLE, most executives would be distraught. But Freer and Eriksson had moved to Los Angeles in anticipation of Gizmondo's US launch, and by the time the company shut down, both were ensconced in multimillion-dollar Bel-Air mansions. What's more, Freer, it seemed, was getting into a new venture: He began financing a startup called Xero Mobile, which was staffed in part with former Gizmondo employees. This company would take aim not at Sony and Nintendo but at the Verizon Wirelesses and T-Mobiles of the world. Like Tiger Telematics before it, Xero would be built around a single technology this time a cell phone advertising system similar to the one designed for the Gizmondo. And just like Tiger, the new firm would be financed by taking over a company with an over-the-counter listing (the former Desi TV, in this case), renaming it, then selling off newly created shares.

But if Gizmondo's financial crash couldn't bring down Freer and Eriksson, a 194-mph Ferrari crash would. One morning, a few weeks after Gizmondo was shuttered, Eriksson got into his red Enzo and saw just how fast the car could go.

The fallout engulfed Eriksson first. DNA tests matched him to the blood found on the driver's-side airbag of the wrecked Enzo, proving conclusively, investigators said, that Eriksson was the driver. Witnesses told authorities that they had seen Karney in the passenger seat of the Ferrari the night before, leading investigators to believe that there was no Mercedes at all. Furthermore, sheriff's investigators, who had estimated earlier that Eriksson's Ferrari was going about 162 mph at the time of the Malibu crash, determined it was actually going more like 194. According to the California Highway Patrol, the fastest ticketed speeder they can recall was a motorcyclist caught doing 160 mph on a highway near Bakersfield.

Alerted that he had bought a one-way ticket to the UK, LA sheriffs arrested Eriksson on April 8 after a search of his Bel-Air home. Perhaps the most telling item they found was an enormous Scarface poster hanging above the bed. What created the biggest stir in the media, however, was the .357 Magnum revolver officers recovered from the house. The gun didn't belong to Eriksson but to a Newport Beach businessman named Roger Davis. This was big news in Orange County, where Davis was known both as a realtor to the rich and as a reserve deputy appointed by sheriff Michael Carona. The sheriff had rewarded some of his election campaign donors with such positions and was being criticized for giving them badges and weapons permits. (Davis says he was a volunteer for the sheriff.) What went unreported in the Southern California papers was that Davis had also been serving as president of Xero Mobile since its inception.

Davis won't comment on the gun or why Eriksson had it. But he is adamant that Eriksson has nothing to do with Xero and points out that Freer is no longer involved in the company.

On April 26, Freer, too, was arrested by LA County sheriff's deputies, in his case on suspicion of impersonating a police officer in connection with the attempt to purchase a .44 Magnum handgun. Released after extensive questioning, the former Gizmondo manager has not yet been charged by the Los Angeles County District Attorney's office and claims to be the victim of a misunderstanding. After Freer's arrest, however, his yacht vanished from Marina del Rey, and his Bel-Air home is now on the market for $6.5 million.

Eriksson does not have such options; his assets were frozen by the Los Angeles County Superior Court in response to a prosecutor's motion alleging that they were obtained by fraud and deceit. At his arraignment in Los Angeles in May, a glum-looking Eriksson pleaded not guilty to seven felony charges – including embezzlement and grand theft – and two misdemeanors; if convicted on all counts, he'll face 14 years in prison. His bail has been set at $3 million (about three times what an accused murderer faces), but US immigration officials have placed a hold on Eriksson, meaning that if released he would go straight to a federal detention center.

While California law-enforcement authorities were cracking down on Eriksson stateside, European financial investigators began plumbing Gizmondo's bankruptcy filings in London. They quickly found a few anomalies: Despite Tiger Telematics' limited investment in research and development, SEC filings show "sustained net losses aggregating over $382.5 million" in the 45 months preceding the resignations of Freer and Eriksson. Liquidators can't yet say where as much as half of that money went.

To untangle the company's finances on behalf of creditors, the High Court in London appointed the formidable firm Begbies Traynor. But even with almost 100 boxes of records that Gizmondo's UK accountants have provided, Begbies investigators have struggled to get a fix on the company's accounts. "There are a variety of different names under which funds were allocated, transferred, and spent," says Paul Davis, senior partner at Begbies. "They used layers and layers of companies that were involved in very complex dealings. It takes a lot of sorting out." Davis is particularly interested in "certain details that suggest money was transferred to offshore accounts."

While Davis acknowledges that he may eventually go after the personal assets of Gizmondo's directors, he says that for now he and his partners have decided to pursue "easy kills that will get us the money to finance our search for the large sums we believe are better hidden." Those "easy kills," according to Davis, are the remaining properties (intellectual and physical) that still belong to Gizmondo.

The executive left to deal with all this, Tiger CEO Carrender, has a more compelling claim to clean hands than any of the directors whose personal assets may end up in Davis' sights. Carrender deferred half of his $1.3 million salary and didn't take any bonuses in 2004 a year that Freer and Eriksson were each paid $2.2 million. And there is no evidence of Carrender's involvement in any of the related-party transactions that benefited the Swedes. Carrender also has a strong defense that he expresses succinctly: "The Gizmondo was actually made and did operate."

FREER IS CURRENTLY LIVING IN LOS ANGELES, and the DA's office has not yet decided whether it will pursue a case against him. He denies any wrongdoing and says he has severed business ties with his friend Eriksson.

As for Eriksson, his court file has been sealed and he is now being held in a special segregated section of the LA Men's Central Jail called K-10, with limited access to visitors. Sheriffs and US Immigration and Customs Enforcement are continuing to explore his activities and the workings of the SGVTA police force. Eriksson's attorneys won't discuss much about the federal government's involvement in the case but insist that the charges against their client are "outrageously overblown," as one of them, Alec Rose, puts it. Rose accuses the British banks, Lombard in particular, of pushing the authorities in Los Angeles to prosecute Eriksson on felony charges. Rose also challenges the allegation that Eriksson "claimed to be a law enforcement officer" at the Malibu crash site.

Joining Rose as Eriksson's cocounsel is Jim Parkman. A member of the late Johnnie Cochran's law firm, Parkman is perhaps best known as the attorney who helped former HealthSouth CEO Richard Scrushy obtain a stunning acquittal on 36 counts of fraud-related charges in 2005. Parkman refuses to discuss the evidence offered by law-enforcement officials that Eriksson made material misrepresentations on the documents he used to import his two Ferraris and the McLaren. All he'll say is, "I feel quite comfortable with where we are on that."

Perhaps the most hapless character in all of this is bus company founder Yosuf Maiwandi. Despite his claim that he was running a legitimate business, Maiwandi was arrested on May 9 by LA County sheriff's deputies on suspicion of perjury, for reporting on California applications that the agency was a government entity. During searches at four locations that same day, police sized an assortment of handguns, badges, and several police jackets. At press time the district attorney's office had not yet filed charges.

In a telephone interview a few weeks earlier, aware of what was coming, Maiwandi blamed his predicament on Eriksson's personal vanity: "This whole thing could have been avoided if Eriksson had just been satisfied driving a Trans-Am."

Randall Sullivan (randysul@aol.com) is the author of several books, including LAbyrinth and The Miracle Detective.